Oil Prices Drop After Dialogue Between Russian and US Leaders
Oil prices declined on Wednesday, reacting to the previous day’s phone conversation between Donald Trump and Vladimir Putin, which both sides described positively, Reuters reports.
Traders expressed concern about the possibility of increased Russian oil supply if the conflict in Ukraine moves toward resolution.
Brent crude futures for May delivery fell by 0.48% to $70.22 per barrel by 09:16 Moscow time. WTI crude contracts dropped by 0.49% to $66.42.
On Tuesday, the leaders of the U.S. and Russia discussed various areas of potential cooperation and agreed to maintain close contact on all matters, including the conflict in Ukraine.
It was announced today that U.S. and Russian delegations will discuss the details of a ceasefire on March 23 in Jeddah, Saudi Arabia, according to U.S. Special Envoy Steve Witkoff.
Analysts say a potential ceasefire could lead to an easing of sanctions on Russia, resulting in greater oil supply and putting further downward pressure on prices.
In addition, concerns of a recession caused by U.S. tariffs on Canada, Mexico, and China have weighed on oil markets, highlighting the risk of weaker demand for energy products.
Analysts at Goldman Sachs noted Wednesday that the oil market continues to focus on downside price risks despite increasing tensions in the Middle East.
“The escalation of tariffs and high spare capacity shifts medium-term risks for our forecast to the downside,” Goldman experts warned.
Trump has pledged to continue attacks against Yemen’s Houthis and has declared that Iran will be held responsible for any group actions disrupting shipping in the Red Sea.
Meanwhile, Israeli airstrikes on Gaza have raised concerns about potential disruptions to oil supply from the region.
U.S. inventory data presents a mixed picture. Crude oil inventories increased by 4.59 million barrels in the week ending March 14, market sources cited the American Petroleum Institute as reporting on Tuesday. Gasoline inventories fell by 1.71 million barrels, while distillate stocks dropped by 2.15 million barrels.
